DRAFT 02/03/2020 ____________ ___, 2020 Metro Parks Tacoma Xxxx Xxxx Xxxx City of Tacoma Xxxx Xxxx Xxxx RE: Letter of Intent to Proceed to Due Diligence, Financing, Development Agreement and Lease Negotiation Dear : This Letter of Intent (“LOI”) confirms the principal understandings and intent to date by and between The Soccer Club of Tacoma, LLC (“TSCOT”), the Metropolitan Park District of Tacoma (“MPT”) and the City of Tacoma (“City”) (collectively, the “Parties”), concerning a Heidelberg Sports Village project (“Project”) that would include a professional class soccer specific stadium (“Stadium”) and a mixed use sports village development (“Development”). The Tacoma City Council and the MPT Board of Park Commissioners each adopted resolutions in late 2017 expressing support for the Project and, pursuant to which, the Parties subsequently agreed to commission a comprehensive professional feasibility study to evaluate it. A team of highly respected consultants to undertake the study was selected by the Parties through a competitive process. The consultant team published the Heidelberg Sports Village Feasibility Study (“Study”) in May 2019. This LOI is premised on the conclusions and recommendations of the Study. Page 1 DRAFT 02/03/2020 This LOI reflects the Parties’ preliminary agreements to date regarding the Project's scope, capital and operational funding, contracting and project delivery and roles and responsibilities of the Parties. 1. Project Scope Principles. The Parties concur in the following principles, as provided in the Study: a. Overall Project Scope: The Study evaluated a Project with three interrelated components, including the Stadium, the Development between the new Stadium and existing Cheney stadium, and the Sports Fields. The Stadium was identified by the Study as a lynchpin for the Project as a whole, and is therefore the principal focus of work to date addressed in this LOI. b. Stadium Scope: The Stadium includes a program that will support the operating of one first division professional women’s soccer franchise (currently Reign FC), and one USL-Championship professional soccer franchise (currently the Tacoma Defiance), and additional professional sports franchises; to wit, a 5,000 fixed seat facility which meets US Soccer professional soccer stadium standards. c. Development Scope: The Study identified the potential for a Development featuring up to approximately 520 multifamily residential units, including affordable housing, and approximately 70,000 square foot retail destination that serves the adjacent stadia to create a dynamic sports and entertainment neighborhood in Central Tacoma. The Development is intended to have a cohesive identity and relationship between the sports-focused elements at Cheney and the new Stadium and the other elements. The Development is Page 2 DRAFT 02/03/2020 anticipated to follow a phased design and construction approach that would accommodate all regulatory requirements. d. Sport Fields: There will be no net loss of available fields due to displacement of existing fields for development of the Stadium. TSCOT will provide for field capacity to offset lost use of the Heidelberg fields until field capacity is restored, and will assist with the long term solution for field replacement. e. Feasibility. The Study concluded that all three components of the Project are feasible. f. Cost Estimating, Financing and Revenue. The Study proposed approaches to all three components of the Project for construction and development costs, funding, financing and revenue generation from activities after construction. The Parties acknowledge that this LOI is premised on the accuracy of those conclusions but concur that confirmation is required prior to any formal agreements among the Parties. g. The Baseball Club of Tacoma Lease. The Baseball Club of Tacoma (“TBCOT”), an affiliate of TSCOT, is a master tenant and operator pursuant to a current lease with the City of Tacoma for Cheney Stadium. That lease provides TBCOT the right to use the City-owned parcels between Cheney and the new Stadium, which are contemplated for the Development for parking purposes in service to Cheney activities. The City and TSCOT acknowledge that any future Development must include sufficient parking to accommodate Cheney stadium activities. Page 3 DRAFT 02/03/2020 2. Funding and Financing Plan. This LOI does not include a fully vetted funding or financing plan for the Stadium. The Parties will exercise their best reasonable efforts to complete an agreed upon funding and financing plan (“Funding Plan”) to fully fund the cost to construct a $60 million Stadium no later than March 31, 2020 after which the Parties will commence meaningful pre-construction planning and development in 2020. Such matters include negotiation of the Development Agreement and Lease consistent with the requirements herein and commencing the processes identified in Section 5(b) regarding the Development. The Parties understand that all MPT and City commitments under the Funding Plan will require (i) confirmation of the availability of all sources of funding identified in the Funding Plan prior to commencement of Stadium construction, and (ii) the consideration and approval of their respective governing bodies, initially in the form of resolutions approving this LOI and the Funding Plan and, eventually, of actions approving legal documents, such as financing agreements, a development agreement and a lease, among others. Release of funding from COT, MPT and TSCOT identified in such Funding Plan for construction shall be contingent upon confirmation of the availability of all other proposed funding sources required to complete the Stadium when construction is scheduled to commence, as well as approval of a Lease and Development and other agreements consistent with the requirements of this LOI. The Parties agree that at a minimum the Funding Plan for the new Stadium shall include: a. Stadium Cost. The Parties assume a Stadium capital cost of $60 million, based on the conclusions of the Study. b. New Markets Tax Credits. TSCOT, MPT and COT will jointly support Congressional reauthorization of the New Markets Tax Credits (“NMTC”) Page 4 DRAFT 02/03/2020 program, recognizing its importance to the Funding Plan. TSCOT shall serve as the guarantor to any NMTCs. If available, NMTCs should provide approximately 20 percent of eligible capital costs toward Stadium construction. If NMTCs are not reauthorized or otherwise unavailable for the Stadium, the Parties will endeavor to identify alternative funding sources to replace NMTC proceeds or other measures to fund the cost to construct the Stadium. c. Other Public Funding. TSCOT, the City of Tacoma and Metro Parks will jointly lead the process to identify other sources of public investment from other public entities including the State of Washington. Specifically, TSCOT should pursue State support in the form of a credit of the State’s share of local taxes to fund Stadium construction costs, consistent with the State’s historical role in funding the construction of major league sports venues in Seattle. These commitments represent a total of $7 million. If $7 million of other public funds is not secured, TSCOT will make up the difference up to a maximum of $2 million. The Parties will share in a proportional decrease based on their respective cash investments in the Stadium in any additional funds secured above $7 million. d. TSCOT Investment. i. TSCOT agrees to provide $2.5 million up front cash toward the Stadium project costs which will be expended first towards master planning and design. ii. TSCOT agrees to fund at least $16 million of the construction cost through guaranteed and secured annual debt service payments (estimated at $900,000 per year, at 3.5% interest for 30 years), over the term of any Page 5 DRAFT 02/03/2020 bonds issued to fund Stadium construction costs. This commitment is not dependent on Stadium revenues. iii. While Stadium revenues will be pledged to debt service, TSCOT will also provide reasonably sufficient security, such as guarantees, for debt service payments. e. Financing. At such time as all sources of cash and debt-service identified in the Funding Plan are furnished and obligated, either or both MPT or the City will issue debt, which in combination with the available cash, is sufficient to fund construction of a $60 million Stadium. f. TSCOT agrees to fund any Stadium-related project costs (including any costs associated with state and local regulatory requirements) that exceed the $60 million total cost estimate. g. City of Tacoma Investment. The City will undertake authorization to fund a maximum capped investment of $15 million, with $10 million cash up front and $5 million paid over two (2) years toward the Stadium project costs. h. Metro Parks Investment. MPT will undertake authorization to fund a maximum capped investment of $7.5 million in cash up front toward the Stadium project costs. i. No Additional City or MPT Funding. Neither the City nor MPT will provide any funding to the extent the NMTCs or Other Public Funding is not available, nor for any costs in excess of the $60 million cost of construction. 3. Stadium Project Delivery. The Parties shall negotiate a Development Agreement for the Stadium under which TSCOT shall procure design professionals and construction Page 6 DRAFT 02/03/2020 contractors and manage construction of the Stadium. In material part, the Development Agreement will provide for: a. procurement, contractual and payment requirements